By Sagarika Jaisinghani

Sept 28 (Reuters)The Turkish lira hit a record low on Monday on growing concerns around clashes between Armenian and Azeri forces, while emerging market stocks tracked gains in Asia as data showed a jump in Chinese industrial profits.

The lira TRY= tumbled 1.5% to a low of 7.79 against the dollar, while the Russian rouble RUB= eased for the fourth straight session. Azerbaijan AZ167862306= and Armenia AM120765485= sovereign dollar-denominated bonds fell as much as 3-4 cents.

“Fears are that Turkey gets dragged into another regional conflict,” said Timothy Ash, EM sovereign strategist at BlueBay Asset Management, referring to the fighting over Nagorno-Karabakh, an enclave in Azerbaijan controlled by ethnic Armenians.

The lira, already among the worst performing European currencies this year, received a brief respite last week following a surprise move by the central bank to raise its key lending rate, but analysts said the average interest rate might not rise by much.

“Such temporary high interest rates, which attempt to purge out short lira positions, make little difference to the medium-term trend because speculative short positions against the lira are not really the reason behind its depreciation,” said Tatha Ghose, FX analyst at Commerzbank.

An index of emerging market currencies .MIEM00000CUS was flat by 0846 GMT, with the South African rand ZAR= easing slightly against the dollar. FRX/

The Hungarian forint EURHUF= was nearly unchanged versus the euro. Ratings agency Moody’s on Friday raised Hungary’s sovereign rating outlook to “positive” from “stable”, partly citing improvements in the domestic and external debt position.

The Swedish krona EURSEK= was a touch higher as data showed retail sales jumped 3% in August from a year earlier.

A basket of developing world stocks .MSCIEF was up 0.9% and on track for its best day in two weeks, propped by gains in Russia .IMOEX. Tech-focussed South Korean and Taiwanese stocks also jumped as investors priced in a boost from tighter U.S. curbs on China’s biggest chipmaker.

The South African stock index .JTOPI jumped 1.9%, while the Turkish bourse .XU100 shed 0.5%.

For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

(Reporting by Sagarika Jaisinghani in Bengaluru Additonal reporting by Daren Butler and Nevzat Devranoglu Editing by Peter Graff)

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